I am a CPA in Texas with an MBA from the University of Chicago. I have seen a lot and made many mistakes. Hopefully by now I will have learned something from them. Just as importantly, you may learn something from my mistakes. You can e-mail me by clicking on my "View my complete profile".

Monday, September 29, 2008

Comrade Smith Reports from Oblast New York

"A mere few weeks ago, the Fannie/Freddie rescue was called 'the mother of all bailouts" by some commentators. ... This puts the Treasury's actions beyond the rule of law. This is a financial coup d'etat, with the only limitation the $700 billion balance sheet figure. ... The Treasury could via incompetence or venality grossly overpay for assets and advisory services, and fail to exclude consultants with conflicts of interest. ... Yet as we discussed the plan makes no sense unless the Orwellian 'fair market prices' means 'above market prices.' ... 'The failure to be honest about [losses] upfront will lead to a taxpayer backlash (or will lead to the production of phony financial statements for the rescue entity, which will lead to revolt by our friendly foreign funding sources).' ... The US needs to wean itself of unsustainable overconsumption, and since consumption has come to depend on growth in indebtedness, a reversal, however, painful is necessary. ... The Treasury program, by deliberately propping up asset prices, will delay finding a market clearing level and thus attenuate the financial crisis", Yves, aka "Comrade" Smith (CS) at Naked Capitalism, 21 September 2008.

"Is that really what got Wall Street and us into this mess--that we followed too religiously the gospel of Robert Taft and Russell Kirk? ... Yet, who got us into this mess, if not the government--the Fed with its easy money, Bush with his profligate spending, and Congress and the SEC by liberating Wall Street and failing to step in and stop the drunken orgy? ... We are going to have to learn to live again within our means. The party's over. ... Who are we kidding? What we are witnessing today is how empires end. The Last Superpower is unable to defend its borders, protect its currency, win its wars or balance its budget. ... An unelected financial elite is now entrusted with the assignment of getting us out of disaster into which an unelected financial elite plunged the nation. We are just spectators", Patrick Buchanan (PB) at the Houston Chronicle, 21 September 2008.

Thank you CS for a superb report from Oblast New York (ONY). Thanks too for paying IA an eight-figure fee for ONY's Henry Paulson as Che Guevarra T-shirt concession. Other concesssions available include: Los Angeles, San Diego, Dallas, Austin, Pittsburgh, Miami, Orlando, San Antonio, Chicago, Detroit, Atlanta, San Francisco-San Jose, and Philadelphia. Concession fees are only payable in one-ounce gold bullion coins: Krugerrands, Maple Leafs, Chinese Pandas and American Eagles. Note to Comrade Richard Fuld: I understand you have about $400 million. For only 400,000 one-ounce bullion coins I'll give you the concessions for all US Oblasts except ONY which CS has. I'm sure, for a very large fee, you could induce CS to sell you her concession. One issue CS. You write, "the only limitation the $700 billion balance sheet figure". CS, that's $700 billion today. The "law" will be amended in one year to read, "$1.4 trillion"! Excepting that, a superb job CS. So superb, you need not go to the gulag for at least a year. Heil Hitler! Excuse me, wrong dictatorship. Long live the proletariat and death to the capitalist running dogs.

Thank you Comrade Buchanan (CB) for your observations from Oblast Washington. An IA war story. About ten years ago as I walked down Los Angeles's Sunset Boulevard near Vine Street in front of the Border's book store, a camera crew interviewed people about some issue. The woman with the microphone walked over and asked my political affiliation. I answered, "I'm a Robert Taft Republican". She looked at me in horror and she and the cameraman walked away. IA's "present sense impression", the woman was not taken aback by the word "Republican", but she had not heard of Robert Taft. My guess: she went to a "J" school and knew virtually no American history. Here's a link to CB's article: http://www.chron.com/disp/story.mpl/editorial/outlook/6012931.html.

The Plan is MLEC multiplied nine times, see my 18 October 2007 post, http://skepticaltexascpa.blogspot.com/2007/10/use-your-own-money.html. The financial statements must be phony. Who will "audit" them? The Big 87654 which "audit" Freddie, Fannie, Citigroup, etc. Where are the Big 87654 when you need them? They should each have released a position paper at 9:00 AM 22 September 2008 stating the plan requires using phony financial statements and they will not be party to it. Well Mark Olson? What's your opinion? What do I suggest? Since 14 October 2007, I have favored "a 25-year moratorium on any GS executive working for the Treasury or Fed", http://skepticaltexascpa.blogspot.com/2007/10/party-like-its-1929.html. I now extend that from GS to include: Merrill, Morgan Stanley, Lehman, Citigroup and Bank of America. We can't afford these clowns in Washington doing favors for their cronies at the public's expense.

I thought some Mafia quotes would be appropriate. "Mafia is a process, not a thing. Mafia is a form of clan-cooperation to which it's individual members pledge lifelong loyalty. ... Friendship, connections, family ties, trust, loyalty, obedience--this was the glue that held us together", Joe Bonnano.

"Everybody has a price", Jimmy Hoffa."I never lie to any man because I don't fear anyone. The only time you lie is when you are afraid", John Gotti. Hank "Treasury" Paulson, Wall Street mob made member is very afraid.

"In Bensonhurst, that was it, becoming a made guy. It's all we kids ever talked about. ... I never saw the other side of it until I in, and then it's too late and you just do your work", Sammy, "The Bull" Gravano. Poor Paulson, he's in so deep. he can't get out. He needs to be put in the federal witness protection program.

"Other kids are brought up nice and sent to Harvard and Yale. Me? I was brought up like a mushroom", Frank Costello.